The Amazon of Higher Education

How tiny, struggling Southern New Hampshire University has become a behemoth.

Five years ago, Southern New Hampshire University was a 2,000-student private school struggling against declining enrollment, poor name recognition, and teetering finances.

Today, it’s the Amazon.com of higher education. The school’s burgeoning online division has 180 different programs with an enrollment of 34,000. Students are referred to as “customers.” It undercuts competitors on tuition. And it deploys data analytics for everything from anticipating future demand to figuring out which students are most likely to stumble.

“We are super-focused on customer service, which is a phrase that most universities can’t even use,” says Paul LeBlanc, SNHU’s president.

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The near demise and subsequent rebirth of SNHU offers a glimpse into the crisis facing American higher education. More than a third of American colleges and universities have deteriorating finances, according to a 2012 report. While more Americans find that a college degree is their only ticket to the middle class, fewer institutions are able to provide it at a reasonable cost.

When LeBlanc took over in 2003, SNHU was struggling. It had poor name recognition and fewer students could afford its rising tuition. When the recession hit, enrollment dipped and it looked as though the school would have to make cuts to stay afloat. LeBlanc, who previously had run an even smaller institution, 300-student Marlboro College in Vermont, thought SNHU’s one hope might be its fledgling online division.

He had long been friends with Clay Christensen, the Harvard Business School professor and author of the groundbreaking book The Innovator’s Dilemma, which examines the impacts of disruptive technologies on traditional industries. LeBlanc made Christensen an SNHU trustee and consulted extensively with him about embracing online education as a way to escape what seemed like certain decline.

In 2009, instead of cutting, LeBlanc asked the board to double down on the online division. He argued that rapid growth in online could quickly produce new revenues that could save the main campus in Manchester, N.H. “It was a big-gulp moment,” he says.

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But he was convinced by Christensen that there were no other options. “The business models implicit in higher-ed are broken,” he says. “Public institutions will not see increasing state funding and private colleges will not see ever-rising tuition.”

His solution was to tackle what colleges were doing poorly: graduating students. Half the students who enroll in post-secondary education never get a degree but still accumulate debt. The low completion rate can be blamed partly on the fact that college is still designed for 18-year-olds who are signing up for an immersive, four-year experience replete with football games and beer-drinking. But those traditional students make up only 20 percent of the post-secondary population. The vast majority are working adults, many with families, whose lives rarely align with an academic timetable.

“College is designed in every way for that 20 percent—cost, time, scheduling, everything,” says LeBlanc. He set out to create an institution for the other 80 percent, one that was flexible and offered a seamless online experience. But in the process, he turned what had been a small New England college with red-brick buildings and a quad into something barely recognizable. There are still nearly 3,000 students enrolled at its campus in Manchester (the men’s soccer team won the NCAA Division II championship last season), but the action has shifted to its fast-growing online division.

The SNHU website works like a one-stop storefront for everything from a master’s in creative writing to a degree in sports management. The school spends millions to employ more than 160 “admissions counselors” who man the phones, especially on weekends, guiding prospective students into the right degree program. Click on an ad for the MBA program and you get a phone call from a counselor in less than nine minutes. If someone asks about transfer credits, SNHU tracks down their old transcripts and pays the administrative fees itself.

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It’s a strategy borrowed from the aggressive recruiting techniques of the University of Phoenix and other for-profit schools. Many of those institutions have come under fire from Congress for gouging students, low completion rates, and inferior degree programs.

The similarities don’t end there. Just like many of the for-profit universities, SNHU tries to maximize efficiencies and scale up everything it does to drive down costs. At SNHU, online courses are created centrally and then farmed out to a small army of adjuncts hired for as little as $2,200 a class. Those adjuncts have scant leeway in crafting the learning experience.

“The instructor is just there to deliver the content,” says Steve Hodownes, the head of SNHU’s online division, which, he says, “helps us create standardization.”

The online courses themselves are a mixture of readings, practice problems, and videos (most under five minutes). Undergrad classes run eight weeks, with a new assignment each week and a final project. Interaction with the instructor (and other students) comes mostly through discussion boards and email. An instructor’s main job is to swoop in when a student is in trouble. Often, they don’t pick up the warning signs themselves. Instead, SNHU’s predictive analytics platform plays watchdog, sending up a red flag to an instructor when a student hasn’t logged on recently or has spent too much time on an assignment. It’s a cookie-cutter approach, and a far cry from what some might recognize as the hallmark of a vibrant education.

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Steven Mintz, who heads the University of Texas’ Institute for Transformational Learning, says there is a lot that people might take issue with in the SNHU model, including the highly standardized courses, and adjuncts who act more like coaches than professors. But it’s also designed for an underserved segment of students who flail in the traditional system. “This is not about Animal House, it’s about students who need a return on their education,” he says.

Even on campus, LeBlanc has his share of critics. Alumni object that SNHU’s slick TV ads cheapen the name by making it seem like it’s the same ilk as Kaplan or University of Phoenix. And some faculty worry that he is trying to usurp their role through the reliance on adjuncts and online teaching tools.

It’s also difficult to determine just how strong an education SNHU is delivering. An online forum offers a decidedly mixed picture, with one review calling it “a great experience,” while another claims, “It is not quite a degree mill, but they give out 4.0's for merely completing the work.” A tally of nearly 4,000 recent graduates conducted by the university showed satisfaction was increasing steadily and that 95 percent would recommend SNHU.

One issue that vexes SNHU is that it goes after many of the same students who are winding up at places like the University of Phoenix—adults, often from the lower middle class, who can’t fit in at a traditional college. That means it is often trying to explain why an online education delivered from a New England nonprofit university is better than its for-profit equivalent.

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LeBlanc insists that SNHU’s sole focus is on serving students. As a nonprofit, he says, SNHU can deliver a higher quality experience because it doesn’t have to satisfy shareholders trying to squeeze out profits. “If I need to put $1 million into academics, I do it,” he says. “But if I run a for-profit, I can’t put in that $1 million because it will hit the bottom line.”

Certainly, SNHU comes out ahead on price. An online student with no transfer credits can get the equivalent of a four-year bachelor’s degree for about $37,000. A comparable degree at University of Phoenix runs about $52,000.

SNHU boasts six-year online graduation rates of about 50 percent for bachelor’s students. While LeBlanc concedes that’s still abysmal—“Would you accept a 50 percent success rate for surgery? For construction?”—it’s partly explained by the fact that most SNHU students are part time and take even longer to finish.

SNHU is clearly determined to push the envelope of online education. It latest gambit is the College for America, which offers college degrees but has no courses and no faculty. Instead, students are required to demonstrate mastery of different “competencies.” These include the ability to display data by using charts and graphs, understanding of marketing terminology, and even the ability to “distinguish fact from opinion.” Here, the role of adjunct faculty is replaced by “evaluators” who determine whether a student project has cleared the bar. Completion of 120 competencies earns an associate’s degree.

The most radical element might be the price. One six-month term costs only $1,250, and students can gobble up as much as they want in that time. “We call it our ‘all-you-can-learn model,’ ” says Kris Clerkin, who runs the division.

The program is just getting started, with around 300 students. Their first graduate completed the program in 100 days, though most are expected to take a couple of years.

LeBlanc says that as odd a university as SNHU might now appear, with its full-throttle marketing and data-driven approach, it will soon blend into the pack. He cites one study that predicts more than 300 nonprofit schools will ramp up their online programs in the next few years. “Frankly, we would have thought they would have been here already,” he says.